Construction of new icebreaking tanker fleet underway amid looming crisis in Arctic LNG project

Arctic LNG 2 is developed with floating gravity structures. Photo of project presentation. (Atle Staalesen/The Independent Barents Observer)
The Zvezda yard in Vladivostok will have plenty of complex Arctic shipbuilding to do over the next years. Not only is the yard assigned with the building of Russia’s new Lider-class icebreakers, a growing number of new tankers are now being added to the company’s order books.

That includes at least 15 carriers for the Arctic LNG 2 project.

Company Smart LNG, a joint venture of shipper Sovcomflot and natural gas company Novatek, on the 7th September signed contracts with financial institution VEB.RF and Zvezda Shipbuilding on the construction and lease of 10 carriers.

On that same day, the Smart LNG also signed long-term charter agreements for the vessels with Arctic LNG 2, the project operating company.

In total, contracts for 15 such vessels have now been signed, including shipbuilding, financing, lease, and time charter contracts, Sovcomflot informs.

Ultimately, more vessels could be added. When Sovcomflot and Novatek announced their cooperation in 2019, they specifically mentioned 17 tankers. The ships are to serve the Arctic LNG 2, the major project now under development in the far northern Gydan Peninsula.

Novatek cuts spending

Unprecedented construction works have been going on in the peninsulas of Yamal and Gydan over the last years. Following the development of the Yamal LNG, the main stress is now on the Arctic LNG 2.

However, an increasingly challenging market situation is creating troubles for the developers.

Novatek is reported to cut its 2020 investment budget by more 30 percent and several projects are likely to experience delays and postponements. According to newspaper Kommersant, the company’s revised investment budget is 170 billion rubles (€1.89 billion), down from the original sum of 250 billion (€2.78 billion).

The cut is triggered by lower demands and plummeting prices.

Arctic LNG 2

Despite the budget cuts, Novatek proceeds with full steam to develop its new flagship project, the Arctic LNG 2.

The Arctic LNG 2 project is built on the banks of great Gulf of Ob. (Map by Yandex Map/The Independent Barents Observer)

All through summer, there has been hectic construction works along the banks of great Gulf of Ob. From the tundra is rising a massive seaport facility that will be able to handle many million tons of liquified natural gas. The Utrenneye terminal will house the gravity-based production structures currently under construction in the Belokamenka yard in Murmansk. And the fleet of ice-class carries will shuttle between terminal facilities and export markets.

Including in the project is also major dredging in the adjacent gulf of Ob.

The Arctic LNG 2 is operated by Novatek in partnership with Total, CNPC, CNOOC, as well as Mitsui and JOGMEC.

The Zvezda

The powerful new vessels will all be built at Zvezda in Vladivostok. According to the yard, they will be 300 meter long, 48,5 meter wide and have a 172,600 cubic meter storage capacity.

Ice class standards are Arc7 and they will be able to break through 2,1 meter thick ice. They will have the power equivalent to 45 MW, which is comparable with a nuclear powered icebreaker, Zvezda informs.

“These are among the technologically most complex ship to build”, the yard underlines. The whole fleet will carry Russian flag and be included in the Russian Maritime Shipping Registry.

From before, a fleet of 15 Arctic carriers shuttle to Sabetta and the Yamal LNG. Those ships, however, are all built at the South Korean Daewoo Shipbuilding and Marine Engineering.

Atle Staalesen, The Independent Barents Observer

For more news from the Barents region visit The Independent Barents Observer.

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